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A Hike for the Holidays

Remember, we need your input to make next week's new Zacks Ultimate Strategy Session episode the best it can be. There are two ways you can participate:

1) Zacks Mailbag: This regular segment will answer your questions ranging from current market conditions, general investing wisdom, usage of the Zacks Rank or any resources of Zacks.com and more. Pretty much anything goes. Sheraz Mian and Tracey Ryniec will each pick one to discuss.

2) Portfolio Makeover: Sheraz Mian and Kevin Cook will review a customer portfolio to give feedback for improvement. No need to send us personal information such as dollar value of holdings. Simply email us with all of the tickers you own.

Just make sure to email your submissions for either one, or both, by tomorrow morning, November 2nd. Email now to mailbag@zacks.com.

The Fed had no surprises for the market on Wednesday as they left rates unchanged. Now, a rate hike seems all set for December, which would likely be the last under Janet Yellen before a new Fed Chair (almost certainly Jerome Powell) takes over in early 2018. The odds of a hike around the holidays is now up to 98%.

Meanwhile, let’s not forget that the month turns this week, so there’s a ton of economic data being released right now. The highlights today included a strong ADP employment report that saw a better-than-expected 235,000 jobs added last month. The Employment Situation report will be announced on Friday. Also, the ISM manufacturing index reached 58.7 in October, which was slower than last month but still well above 50. (Recall that September’s ISM reading was a 13-year high.)

Amid all this news, two-thirds of the major indices managed another day of gains. The Dow was up 0.25% to 23,435 and the S&P advanced 0.16% to 2579.4. These indices are again near their all-time highs. Unfortunately, the NASDAQ didn’t go along for the ride, as it slipped 0.17% to 6716.5. Tomorrow will be another busy day due to the continuation of earnings season and the official announcement of the new Fed Chair. However, the biggest news on Thursday will likely be the rollout of the House’s tax reform plan, which was originally planned for today but was delayed until tomorrow.

In the portfolios, TAZR Trader added a Chinese Internet search provider that should rebound nicely from a recent pullback. In a diversification move for the Home Run Investor, Brian Bolan added a stock from the hot transportation space. Finally, Dave added once to Momentum Trader and twice to Surprise Trader. Give it all a look below:

Today's Portfolio Highlights:

TAZR Trader: Baidu (BIDU) pulled back sharply after its most recent earnings report as company guidance confused some analysts and investors. Kevin was tempted to add this Chinese Internet search provider last week, but first he wanted to dissect the reasons for the plunge. It turns out that BIDU had to “self-restrict” certain political messages and ads, which shouldn’t impact its long-term potential in video, the cloud, AI and autonomous cars. In fact, it is still expected to report 22% top-line growth in 2018 and about 10% EPS growth. Not confused, Kevin sees potentially 5% downside from $250…but a 25% upside scenario. He likes those odds, so he added BIDU on Wednesday with a 10% allocation. Learn a lot more about this new addition in the complete commentary.

Surprise Trader: As earnings season rolls on, Dave added two more picks to the portfolio on Wednesday: Etsy (ETSY) and LGI Homes (LGIH). ETSY is a site that buys and sells hand-made items…and business is booming. Meanwhile, the editor is feeling pretty good about LGIH after the great report from KB Home. Dave added these names with 12.5% allocations each. ETSY reports on November 6 and LGIH reports on November 7. Read the full write-up for more on these moves.

Home Run Investor: Transportation stocks have been doing well over the past few weeks, so Brian Bolan has high hopes for today’s addition of Covenant Transport (CVTI). Furthermore, the move helps to diversify this tech-heavy portfolio a bit. The company has some positive momentum after putting together a couple quarters of top and bottom-line beats. Looking forward, CVTI is expected to report good earnings growth next year along with solid revenue growth this year and next. The full write-up has more specifics on this new addition.

Momentum Trader: Small-cap energy is a great place to invest right now, according to Dave. So when HollyFrontier (HFC) broke out big today on a solid earnings report, the editor was quick to add this petroleum refiner to the portfolio with a 12.5% allocation. See the full write-up for more.

All the Best,
Jim Giaquinto

One More Thing…

PROGRAMMING NOTE: Our own John Blank, editor of Large-Cap Trader, was on CNBC this afternoon discussing today’s report from Shake Shack (SHAK). Click here to watch the segment.

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